Funerals, betting and gambling have been exempted while almost all other services will be taxed from July 1. Under the new Service Tax regime, only 17 services are in the negative list, which means they will not be subjected to tax. The government has widened the definition of 'Services' to bring in more activities under the tax net. At present, 119 services that come under 'positive list' are levied. The 'negative list" approach was proposed in the Budget. Following assent of the President to the Finance Bill, the Finance Ministry said the new service tax regime will come into force from July 1.

The Budget also hiked the service tax rate by two per cent to 12 per cent. Services like metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept in the negative list. Other important services which will not attract the tax include funeral, burial, mutate services and transport of deceased.

Coaching classes and training institutions will come under the net, though the tax will not be levied on school, university education and approved vocational courses, Travel in first class and in air-conditioned rail coaches, too, will attract service tax. The services sector account for about 60 per cent of the country's Gross Domestic Product. In order to bring as many services as possible in the net, the government has come out with a very wide definition of service. With some exception, it has been defined service as "any activity carried out by a person for consideration". The government aims to garner Rs 1.24 lakh crore from the Service Tax during 2012-13.